Foreign chips in Japan growing

In the second quarter of 1997, the percentage of chips made in the U.S., South Korea, and elsewhere grew to a record 35.8 percent, according to U.S. Commerce Department.

December 11, 19973:25 PM PST

Foreign manufacturers' share of the Japanese semiconductor market rose to a new high in the second quarter of 1997, according to figures released by the U.S. Trade Representative's Office.

The percentage of chips made in the U.S., South Korea, and elsewhere grew 3.2 points to a record 35.8 percent, according to U.S. Commerce Department calculations. U.S. firms gained in microprocessors and other segments, while Korean companies showed advances principally in DRAM (dynamic random access memory) chips.

The gains track with steady increases since the August 1996 signing of a bilateral agreement between the U.S. and Japan that seeks to provide for open markets and cooperation between the two countries' semiconductor industries. Japan is the world's second-largest market for computers, but has historically been difficult for foreign manufacturers to penetrate.

"During the four quarters that the U.S. government has been calculating the foreign market share under the 1996 semiconductor accords, foreign share has risen to an average 31.2 percent, compared with an average 27.3 percent during the last four quarters of the 1991 U.S.-Japan semiconductor agreement," U.S. Trade Representative Charlene Barshefsky said in a prepared statement.

Barshefsky's office attributed the growth to increased sales by U.S. and South Korean chipmakers as well as a flat Japanese market. That is, more competitively priced foreign products did well in a weak Japanese economy.

But foreign manufacturers' share of the Japanese market may well slip in the third quarter because of continued weakness. Japanese PC sales have been particularly hard hit since the April introduction of a consumption tax.

Besides aiming to forge open markets and providing for the collection of market share data, the 1996 accord created a Global Government Forum (GGF), comprising representatives of the U.S. and Japanese governments. The advisory body, which has since added South Korean and European Union representatives, is meant to tackle policy issues ranging from trade liberalization and intellectual property rights to worker health and safety and the environment.

The U.S. and Japan previously signed semiconductor agreements in 1991 and 1986.